Background
Muhammad Abd al-Hamid was a debtor in bankruptcy proceedings before the Haifa District Court (Judge S. Benjo, case פש”ר 40237-09-19). On 12 March 2026, the district court annulled his bankruptcy on account of his conduct in the proceedings. On 18 March 2026, the court rejected his application to set aside that annulment. Abd al-Hamid then filed a petition for leave to appeal that ruling at the Supreme Court and, alongside it, applied for a full waiver of both the court filing fee and the security deposit (ערובה) required under Israeli civil procedure rules.
In support of his application, Abd al-Hamid argued that his financial situation was poor as a result of the very bankruptcy proceedings at issue; that he had no savings or liquid assets; that he and his wife worked only occasional jobs for low wages; and that despite efforts he had been unable to raise the amounts required. He also contended that his appeal had good prospects of success. The trustee in bankruptcy (Respondent 1, Navad Shapira) opposed the application, pointing to factual inconsistencies — notably that Abd al-Hamid declared a monthly income of approximately NIS 6,000 from occasional work while simultaneously submitting a National Insurance Institute certificate showing him as “not employed” — and arguing that he had not discharged his procedural misconduct over multiple opportunities afforded to him by the lower court.
Under Item 10 of the Third Schedule to the Civil Procedure Regulations 5779-2018, the security deposit for a leave-to-appeal petition filed by a debtor in bankruptcy proceedings is set at a reduced flat sum of NIS 3,000 — significantly lower than the deposit required in ordinary Supreme Court leave-to-appeal proceedings.
The Court’s Holding
Registrar Moran Yahav denied the application for a waiver or further reduction of the security deposit, but granted an exemption from the court filing fee. The Registrar reaffirmed the established two-part cumulative test for obtaining a fee or deposit waiver: (1) the applicant must establish financial inability through a full and current evidentiary foundation, and (2) the applicant must show sufficient (for the fee waiver) or substantial (for the deposit waiver) prospects of success on appeal. Additionally, the applicant must demonstrate that he cannot raise the required sum with the assistance of his close social environment.
Applying that test, the Registrar held that Abd al-Hamid had not laid an adequate evidentiary foundation. His materials lacked bank account statements for the period preceding the application (only a single current-account page was produced), contained no itemisation of his monthly expenses, offered no explanation of how he was financing his legal representation, and included no account of efforts to seek assistance from family or friends. The Registrar also noted the unexplained discrepancy between his claimed earnings and his National Insurance status. The Registrar emphasised that being a party to bankruptcy proceedings is not, by itself, sufficient to obtain a waiver: the regulations already accommodate a debtor’s presumed financial difficulty by setting the deposit at NIS 3,000 rather than the standard higher amount. No further reduction was therefore warranted.
The trustee’s request for a costs order against Abd al-Hamid was declined, the Registrar noting that the Supreme Court does not customarily award costs in proceedings concerning security-deposit waiver applications, and finding no special circumstances to depart from that practice. Abd al-Hamid was ordered to lodge the NIS 3,000 deposit by 28 June 2026, failing which the proceedings may be struck out without further order.
Key Takeaways
- Bankruptcy status alone does not exempt a debtor from providing a full factual and evidentiary basis for a financial-hardship waiver; it merely justifies the reduced deposit already prescribed by Item 10 of the Third Schedule to the Civil Procedure Regulations.
- An applicant seeking a fee or deposit waiver must supply comprehensive bank records, a detailed expense breakdown, an explanation of how legal representation is being funded, and evidence of unsuccessful efforts to raise funds from close associates.
- Factual inconsistencies in the application — such as a declared income that conflicts with a National Insurance certificate — will weigh against granting a waiver.
- The Supreme Court does not ordinarily award costs against applicants in security-deposit waiver proceedings, even where the application is refused.
Why It Matters
This decision reinforces the procedural gatekeeping function of fee and deposit requirements in Israeli appellate litigation. It clarifies that the reduced NIS 3,000 deposit set by the regulations for bankruptcy-related leave-to-appeal petitions represents the legislature’s own accommodation of a debtor’s presumed hardship, and that further relief requires concrete, well-documented proof of inability to pay — not merely the fact of insolvency.
For practitioners advising insolvent clients who wish to appeal adverse bankruptcy rulings, the decision provides a practical checklist: full bank statements, itemised expenses, disclosure of legal-fee funding arrangements, and documented attempts to obtain third-party assistance are all necessary components of a properly supported waiver application. Absent that documentation, the application is likely to fail even where the underlying financial distress is genuine.